Is it happening with you as well?
A lot of traffic is coming on your e-commerce store, the products pages are conversion-optimized, and your store has a sleek & streamlined the checkout process. Still, the conversion rate of your store is just around 2-3% and ultimately you have to consider it as a good conversion rate.
Why aren't more of your visitors converting?
In many online stores, it is not the customer experience, products, or website design that pause the customer journey. It is the pricing.
Whether the customers are buying things online or offline, the most influential factor in the purchase decision is Price. Almost half of the online buyers abandon their shopping due to unexpected extra costs. Obviously, price is one of the most common roadblocks for most unsuccessful purchases. This is where the feature Buy Now, Pay Later (BNPL) can be an elixir for your suffering conversion rates.
When the cost gets split into multiple instalments, then it is easily affordable for buyers to easily make payments and thus buy the item of even high value. This, in turn, will boost your conversion rates. If you are thinking to implement this functionality in your e-commerce store then you must continue reading this article.
How Buy Now, Pay Later Works?
Buy Now, Pay Later or BNPL work the same as it is written. A customer will buy an item instantly but will pay later. This is the complete process:
- A customer will find the desired product and add it to the cart.
- If they aren’t able to make the complete payment upfront, they can choose the BNPL payment option in which the total cost would be split into multiple smaller payments, generally 4-6 payments in the span of several weeks or months.
- During the checkout, the customer has to pay only the first installment.
- The order will be processed by the merchant as usual and will be delivered to the customer.
- The BNPL provider will pay the complete payment to the merchant. Thus, the merchant is getting the complete payment instantly. In the upcoming weeks, it is the total responsibility of the BNPL provider to receive the remaining payments from the customers.
The best thing about BNPL is that the customers don’t have to leave the store just because the price of the product they were considering is not in their budget. They split the price and pay them in easily manageable installments that fit their budget. The merchants will enjoy the higher conversions, and increased order value without any risk – as it has been taken by the BNPL provider. Thus, all the 3 entities are satisfied with this mechanism.
In a way, BNPL is combining all the best parts of credit cards and layaway without any drawbacks. Consumers don’t need to deal with high-interest credit cards with hefty charges, and merchants don’t need to worry about collecting payments.
Are Customers really prefer BNPL?
Yes! The majority of the customers love BNPL with open arms and these statistics reveal that:
1. Popularity in the current generation:
Currently, more than 75% of the BNPL users are Gen Zers and in the upcoming few years, the baby boomers will also have a significant share of one-third of users. As Gen Zers continue to amass spending power, BNPL usage will only increase in future.
2. BNPL is becoming mainstream:
The usage of BNPL is now catching. The pandemic year 2020 has accelerated its growth as the people had stretching budgets and they were mostly buying things online. Since, the start of the pandemic, the user base of BNPL has grown 85% in just fifteen months.
3. Offer price convenience and affordability:
More than half of the BNPL users prefer BNPL in their online purchases as it is easy to use and allow them to complete the payment in a span of time. Notably, 40% of online shoppers choose this flexible payment method as they trust it.
The other reasons for choosing BNPL are:
- Let’s customers budget their monthly expenses
- Can’t afford full payment at once
- Don’t need to pay high interests
- Improving Credit Score
- Less chances of fraud
Benefits of BNPL for Online Retailers:
The benefits of BNPL are not just limited to online buyers are e-commerce retailers are also leveraging it to the fullest. In fact, they are enjoying more than customers as the conversion rates are increasing by a good margin.
1. Sales have increased of BNPL-accepting merchants:
More than 50% of the BNPL-accepting merchants find their sales increasing. This clearly shows why one in four online retailers have started using BNPL in their stores.
Apart from the purchases getting affordable for customers, BNPL is also helping retailers to retain the old inaccessible customers, buyers who can’t purchase upfront, and those who don’t have a credit card.
2. Increase Average Order Value (AOV):
By using BNPL the customers can split the total cost into multiple payments which are easily manageable, this enables them to even make larger purchases easily. More than 50% of the buyers are agreeing to the fact that BNPL helps them in spending 10-20% more than they would have been able to buy using traditional payment methods.
3. Removes friction from the funnel:
The reason why BNPL is effective in increasing conversion rates is that it reduces or completely removes friction. There are two critical moments during which customers see the price of the product: when they visit a product description page and when they check out. But if they are given the option of BNPL, they are shown a much lower and manageable price. So the customers don’t hesitate while adding the product to the cart or during the final checkout.
4. Higher Customer Lifetime Value:
BNPL is a win-win situation for both buyers and retailers as the buyers get more flexibility of what and how they buy. Retailers can attract new millennials who will turn into repeating patrons and convert higher average basket sizes.
We all know that in customer retention, a positive purchase experience is highly important. If the customers are coming again and again then surely you are offering a great customer experience. In addition, if they come to know that you are offering the BNPL option, then they will come for a bigger purchase than before.
If there is one e-commerce trend that you can trust blindly, it is Buy Now, Pay Later. This fan-favourite payment option is popular among consumers and retailers alike.
Want to add BNPL to your e-commerce store? We are here for you. At Ceymox Technologies, the best e-commerce development company in India, we are having expertise in implementing new & advanced functionalities in your e-commerce store. Let us know your requirements.